Paragraph 13 Meaning of making syndicated loans
For the purposes of this paragraph–
“advance” means the total sum of money, which may be payable in instalments, required to be lent by a lender or lenders to person A, B or C (whichever is appropriate) pursuant to any of the arrangements described in sub–paragraph (2) below;
“all land” means all the land which is to secure an advance;
“beneficial and legal or beneficial interest in the mortgage” shall be deemed, in relation to land situated outside England, Wales and Northern Ireland, to refer to any title in the mortgage;
“expected value” means the value which land is expected to have by the time the last instalment payable pursuant to any arrangement referred to in sub–paragraph (2) below, (and whether or not to be paid or contributed to by the lending body) is paid to person A, B or C (whichever is appropriate);
“land” means land which is situated in the United Kingdom or in any country or territory for the time being designated by order under section 14f1 of the Act (power to make advances secured on land overseas);
“lender” means any person who contributes or agrees to contribute to an advance, and any person who acquires a lender’s interest in the mortgage in place of that lender (and does not include any lending body such as referred to in the arrangement described in sub–paragraph (2)(c) below);
“mortgage of land” means one or more than one mortgage of land or heritable security over land, or, in relation to land situated outside the United Kingdom, any equivalent form of security which acknowledges a debt, obliges the borrower to pay it and secures payment of that debt on land; and a mortgage of land shall be of any of the following:
a legal estate,
an equitable interest in land, provided that such equitable interest is in land which is situated in England, Wales or Northern Ireland, is of a description and is created in circumstances which are prescribed for the time being in an order made under section 10(6) of the Actf2 and that any prescribed conditions with which a society must comply by virtue of such an order are complied with by the lending body, or
any title or interest in or over the land if the land is situated outside England, Wales and Northern Ireland;
and “mortgage” shall be construed accordingly except where the context otherwise requires in sub–paragraph (2)(c)(ii) below;
“original expected value” means, where all land can be valued at the time when the lending body pays its first contribution to an advance or acquires a right or interest in a mortgage as described in sub–paragraph (2) below, the expected value of all land as determined at that time, or where the expected value of all land cannot be determined at that time, the expected value of land which is to partially secure an advance as determined when the lending body pays its first contribution to an advance or acquires a right or interest in such a mortgage, and
“value of land” for the purposes of sub–paragraph (3) below, means the value of land after deducting from that value any mortgage debt of person A, B or C, whichever is appropriate, outstanding under a mortgage of land at the time the lending body is required to be satisfied of any of the matters referred to in sub–paragraph (3) below.
In this Schedule, “making syndicated loans” means any of the following–
subject to sub–paragraph (6) below, where the lending body, acting alone or with one or more persons, makes or agrees to make an advance to another person or persons (“known as person A”) pursuant to an arrangement by virtue of which person A grants a mortgage of land to one or more persons (who may or may not be any one or more of the lenders) who may hold the mortgage on trust for, or otherwise hold the mortgage on behalf of the lenders, and the lending body thereby acquires a beneficial and legal or beneficial interest in the mortgage;
subject to sub–paragraph (6) below, where one or more persons has made, or has agreed to make, an advance to another person or persons “known as person B”) pursuant to an arrangement by virtue of which person B grants a mortgage of land to any one or more persons (who may or may not be any one or more of the lenders) who may hold the mortgage on trust for, or otherwise hold the mortgage on behalf of the lenders, and the lending body acquires a beneficial and legal or beneficial interest in the mortgage in place of one or more of the lenders in respect of all or part of the amount lent or to be lent by that lender or lenders under such arrangement, and
where–
one or more persons has made, or has agreed to make, an advance to another person or persons (“known as person C”) pursuant to an arrangement by virtue of which person C grants a mortgage of land to any one or more persons (who may or may not be any one or more of the lenders) who may hold the mortgage on trust for, or otherwise hold the mortgage on behalf of the lenders, and
the lending body acquires from any of the lenders who holds a beneficial and legal or beneficial interest in the mortgage a right to receive sums of money from such lender (“the transferor”), provided that the right to receive the principal element of those sums is secured by way of mortgage of or charge over the rights of the transferor under the arrangement referred to in sub–paragraph (i) above.
In order to make a syndicated loan the lending body must be satisfied of any of the following–
if the advance has been made before the time of acquisition by the lending body of the interest or right referred to in sub–paragraph (2) above that, at the time of such acquisition, the advance is not greater than the value of all land;
where paragraph (a) above does not apply, and the advance is not payable by instalments, that the advance does not exceed the value of all land at the time such advance is made;
where the advance is payable by instalments one or more of which is outstanding at the time of acquisition by the lending body of the right or interest referred to in sub– paragraph (2) above, that, at the time the lending body pays its first contribution to the advance, if no part of the advance has been made before that time,
the advance does not exceed the expected value as determined at that time of all land, and
the amount paid by the lending body and the amount (if any) paid by the other lenders at the time the lending body makes its first contribution to the advance does not exceed the value at that time of the land which is to secure such amount;
where the advance is payable by instalments one or more of which is outstanding at the time of acquisition by the lending body of the right or interest referred to in sub– paragraph (2) above and part of the advance has been made before such time,
the advance does not exceed the expected value as determined at that time of all land, and
the amount paid by the lenders as a contribution to the advance (including the amount (if any) paid by the lending body if the lending body is a lender) up to and including the time of such acquisition does not exceed the value of the land which is to secure such amount;
if the advance exceeds the original expected value,
the amount paid by the lenders as a contribution to the advance (including the amount (if any) paid by the lending body) up to and including the time the lending body makes its first contribution to the advance or acquires the right or interest referred to in sub–paragraph (2) above does not exceed the value at that time of the land which is to secure such amount, and
if the lending body pays a contribution to the advance which, when aggregated with the amount paid by the lenders both up to and at that time exceeds the original expected value, such contribution when aggregated with the amount (if any) paid by the other lenders both up to and at that time does not exceed the expected value as determined when such contribution is made of all land, and
if the lending body pays a contribution to the advance which, when aggregated with the amount paid by the lenders both at that time and up to that time exceeds the original expected value, the sum paid by the lenders before such contribution by the lending body is made does not exceed the value as determined when such contribution is made of all land.
Where a lending body has entered into an arrangement such as is described in sub–paragraph (2)(c) above, the amount which that body pays in pursuance of that arrangement shall not exceed the sum which such body would have been able to lend if it were a lender subject to sub–paragraph (3) above.
For the avoidance of doubt the lending body may dispose of all or any part of any right or interest which it has acquired pursuant to any arrangement referred to in sub–paragraph (2) above, and notwithstanding such disposal, may act as agent, trustee or otherwise on behalf of any of the lenders in connection with that arrangement.
A lending body does not make a syndicated loan where it makes an advance pursuant to any arrangement the terms of which are such that the lending body, while a party to the arrangement, is to be the sole lender under such arrangement (notwithstanding that the body may have acquired an interest in a mortgage from any of the lenders or subsequently may dispose of its interest).
Annotations
Footnotes
- f1
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Seethe Building Societies (Isle of Man) Order 1987 (S.I. 1987/1498); the Building Societies (Jersey) Order 1987 (S.I. 1987/1872); the Building Societies (Guernsey and Alderney) Order 1988 (S.I. 1988/1394); the Building Societies (Gibraltar) Order 1989 (S.I. 1988/1817), and the Building Societies (Member States) Order 1992 (S.I. 1992/1547).
- f2
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Seethe Building Societies (Prescribed Equitable Interests) Order 1986 (S.I. 1986/2099).